TY - JOUR
T1 - Petro Rents, Political Institutions, and Hidden Wealth
T2 - Evidence from Offshore Bank Accounts
AU - Andersen, Jørgen Juel
AU - Johannesen, Niels
AU - Lassen, David Dreyer
AU - Paltseva, Elena
PY - 2017/8/1
Y1 - 2017/8/1
N2 - Do political institutions limit rent seeking by politicians? We study the transformation of petroleum rents, almost universally under direct government control, into hidden wealth using unique data on bank deposits in offshore financial centers that specialize in secrecy and asset protection. Our main finding is that plausibly exogenous shocks to petroleum income are associated with significant increases in hidden wealth, but only when institutional checks and balances are weak. The results suggest that around 15% of the windfall gains accruing to petroleum-producing countries with autocratic rulers is diverted to secret accounts. We find very limited evidence that shocks to other types of income not directly controlled by governments affect hidden wealth.
AB - Do political institutions limit rent seeking by politicians? We study the transformation of petroleum rents, almost universally under direct government control, into hidden wealth using unique data on bank deposits in offshore financial centers that specialize in secrecy and asset protection. Our main finding is that plausibly exogenous shocks to petroleum income are associated with significant increases in hidden wealth, but only when institutional checks and balances are weak. The results suggest that around 15% of the windfall gains accruing to petroleum-producing countries with autocratic rulers is diverted to secret accounts. We find very limited evidence that shocks to other types of income not directly controlled by governments affect hidden wealth.
U2 - 10.1093/jeea/jvw019
DO - 10.1093/jeea/jvw019
M3 - Journal article
SN - 1542-4774
VL - 15
SP - 818
EP - 860
JO - Journal of the European Economic Association
JF - Journal of the European Economic Association
IS - 4
ER -